Scottish Futures Trust (SFT) have released their first update of the Standard Form DBFM Agreement since November 2016. The DBFM Agreement is the standard form of document for the design, build, finance and maintenance of projects delivered through the Scottish Government’s hub initiative. Authorities receiving government funding for hub DBFM projects are required to use the standard form DBFM Agreement. An updated Standard User’s Guide has also been produced to accompany the update – both documents can be viewed in full here.

As well as crystallising a number of changes to the previous version of the standard form DBFM Agreement which had become “market”, Version 2.5 implements changes necessitated by the General Protection Regulation (GDPR), recommendations of the Cole Report following the Edinburgh Schools Inquiry as well as adjusting some aspects of risk transfer. In the latter case, SFT submit the adjustments should provide better value for money for the public sector, with the risks having previously been priced by the private sector and as such paid for by the public sector, whether or not the risk occurred.

The main changes are as follows:

  1. Inclusion of a Protocol for wayleaves, servitudes and other related instruments at Schedule 27. There is no adjustment to the position previously provided in hub projects that it is for DBFM Co to seek to identify and obtain any necessary wayleaves, but the protocol sets out a clearer procedure for obtaining the Authority’s input and approval.

  2. Title risk remains with the public sector, other than risk of compliance with disclosed title information or the Reserved Rights. Whilst this is not a change from the previous standard form position, title risk has in the last couple of years become an area of increasing debate. Version 2.5 amends Clause 10.1.4 to provide that DBFM Co cannot be expected to have satisfied itself as to the precautions, time and methods of working necessary to prevent nuisance or inference if such matters can only be ascertained from title review that has not been disclosed. This amendment appears to attempt to address the often debated interaction between Clause 10 (which deals with the condition of the Site) and the property and title disclosures in Schedule Part 5.

  3. A specific sub-clause has been inserted at clause 12.10 confirming that both DBFM Co and the Authority are to promptly take all steps necessary to carry out and complete their respective obligations pursuant to the BIM Protocol, which has been inserted at Section 9 of Schedule Part 6. Building Information Modelling (BIM) is a technological solution intended to facilitate the sharing of design information in real time amongst the project team by means of a common software platform (sometimes referred to as the Common Data Environment). SFT have been working with the Scottish Government to support the Public Sector in the adoption of BIM following the Review of Scottish Public Sector Procurement in Construction recommending that BIM should be adopted in Public Sector projects, where appropriate. For more information on BIM, please see our e-guide here.

  4. One of the criticisms of the Cole Report following the Edinburgh Schools’ Inquiry was the lack of availability of as-built drawings. This appears to be addressed through the inclusion of a definitive time scale by which as-built building specifications and drawings are to be provided to the Authority.

  5. The position on DBFM CO’s obligation to comply with Authority Policies has been clarified so that the obligation applies insofar as the Authority Policies are applicable to the Project Operations – historically it has been a concern of contractors that they may be required to comply with Authority Policies which may conflict with their own policies.

  6. Drafting regarding Protecting Vulnerable Groups (PVG) has been updated. Many Authorities had raised concerns regarding the practical application of the drafting in the previous version of the standard form. Version 2.5 links the drafting more closely to the provisions of the Protection of Vulnerable Groups (Scotland) Act 2007.

  7. New provisions at Clause 36.1 require DBFM Co to comply with Scottish Procurement Policy Note 10/2016 in relation to project bank accounts as if DBFM Co were a relevant body to which the Scottish Public Finance Manual applies. A project bank account allows participating firms (the beneficiaries) to be paid for work done, without funds flowing through the main contractor’s bank account, ensuring that all beneficiaries, including the main contractor, are paid simultaneously. We consider the pros and cons of project bank accounts in more detail here. Continuing the theme of prompt payment for the supply chain, several recent projects included provisions requiring payment within 30 days from application for payment, rather than invoice and these provisions have been formalised in Version 2.5, together with the requirement that these provisions be included in sub-contracts.

  8. The Authority’s remedies where DBFM Co, or a DBFM Co Party has committed a Prohibited Act have been restricted so that the Authority’s right to terminate only applies in the event that DBFM Co, or an employee of DBFM Co (excluding DBFM Co Parties) commits a Prohibited Act. If a DBFM Co Party has committed the Prohibited Act, the Authority can only request that DBFM Co terminates their appointment.

  9. The Data Protection wording at Clause 60 has been updated to reflect GDPR and the Data Protection Act 2018. This is accompanied by a new Schedule Part 28, to be populated by the parties with the processing of personal data that is permitted in relation to the DBFM agreement.

  10. Provisions to allow the DBFM Agreement to be executed in counterpart have been included. Given the document checking required in relation to financial close at projects such as these, we do not consider this will have much practical significance.

  11. Where the Equipment schedule at Schedule Part 11 was previously blank, drafting has now been inserted which seeks to clarify both parties’ obligations. It also sets out an Equipment Responsibility Matrix with responsibility for supply, installation, commissioning, maintenance, lifecycle and decommissioning for each equipment group.

Whilst the changes to introduced by Version 2.5 are perhaps not as significant as those we saw in the wake of ESA10, they are a welcome formalisation of the market position being agreed in practice across all five Scottish hub territories. Version 2.5 also provides some additional safeguards for both DBFM Co and Authorities where the drafting of the previous version of the standard form was open to interpretation.